Question
What is the name of your state? Utah
I have a Family Trust doc which was generated in '97. It included life insurance policies. This year I've asked my NYL ins agent to change the beneficiaries from the trust to named individuals. Does that change with the ins co. automatically supercede the trust instructions...or do I need to provide a modification to the trust as well? In other words in the event of my death, would the orig trust take precedent or the newly changed NYL policies' beneficiaries/individuals overrule and receive the monies direct (w/o trust mod)? Also are the named beneficiaries liable for any taxes?
Answer
Beneficiary designations override a trust and a will, so you need to send WRITTEN instructions about the beneficiary changes to the life insurance company and ALSO revise the trust.
How can we tell you what the tax implications are for beneficiaries when you didn't mention how much they are getting?
DANDY DON IN OKLAHOMA (tiekh@yahoo.com)
Answer
Thank you. My understanding has been that any life ins named beneficiaries (outside of a trust) would receive their complete monies tax free/unencumbered direct from the ins co. Regardless of the estate of the deceased. There are 5 beneficiaries each receiving approx $85k. Is there an exemption of amounts (total or partial) from being taxed either prior to or after dispersement?Anyone else with definate knowledge on this and/or the orig post ... please reply. THANKS!
Answer
There is a $2 million exemption on federal taxes, but the beneficiaries would have to consult with a CPA or tax accountant to determine if there were any state taxes due.
Answer
Thanks so much!